Two proteins, barnase, the extracellular ribonuclease of Bacillus amyloliquefaciens, and barstar, its intracellular inibitor, are being developed as a model system for the study of protein folding and protein-protein interactions. Amino acid sequence determination and X-ray structure characterization are being carried out along with thermodynamic studies of folding reactions. A peptide complementation system for barnase has been developed which will be used to investigate the roles of specific residues in both folding and enzymatic activity.